Johnson Johnson produces a single product called Swizzle which requires two processes. Normal loss in each process is 10%. Scrap units are sold for $4 each. The following information is available for the processes: Process 1 Process 2 Direct materials (4000 units) $32 400 Added direct materials $6480 Direct Labour $18 640 $20 000 Production Overheads $24 000 $33 000 Output Transferred to process 2 3800 units Output Transferred to finished goods 4250 units Prepare: 1) The process accounts 2) The Scrap Account 3) The Abnormal loss and gains a/c if necessary.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Johnson Johnson produces a single product called Swizzle which requires two processes. Normal loss in each process is 10%. Scrap units are sold for $4 each. The following information is available for the processes:
Process 1 Process 2
Direct materials (4000 units) $32 400
Added direct materials $6480
Direct Labour $18 640 $20 000
Production
Output Transferred to process 2 3800 units Output Transferred to finished goods 4250 units
Prepare: 1) The process accounts
2) The Scrap Account
3) The Abnormal loss and gains a/c if necessary.
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